SEC Asks Coinbase CEO to Halt Trading, Except Bitcoin

Brian Armstrong, the CEO of Coinbase (NYSE:COIN) , recently disclosed that the U.S. Securities and Exchange Commission had requested that the exchange halt trading for all digital assets other than Bitcoin. Prior to suing Coinbase last month for allegedly failing to register as a broker, the SEC had asked for this.

The SEC requested that Coinbase suspend all cryptocurrency trading, except for #Bitcoin, before taking legal action against them.$COIN — InvestorTurf (@InvestorTurf) July 31, 2023

Armstrong stated in a conversation with the Financial Times,

“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” Armstrong said. “And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin.” 

13 cryptocurrencies (SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO) were classified as securities by the Securities and Exchange Commission (SEC) in their case. The regulator regarded these mostly infrequently traded assets as securities, and by making them available to customers, the exchange fell under the SEC's purview.

At that point, we had no choice but to: Armstrong

Armstrong claimed in the interview that if Coinbase had complied with these directives, it would have sent the wrong signal. In such a case, unless they were registered with the commission, the majority of American cryptocurrency businesses would have been considered to be operating illegally. He stated:

"We had no other option at that point. If we delisted all assets except bitcoin, which is not what the law says, it could have meant the end of the crypto industry in the US," the CEO explained. "So, the choice was clear – let's go to court and see what the court decides."

Recently, the industry received some clarification on the topic of security and non-security.In a lawsuit, US District Judge Analisa Torres of the US District Court for the Southern District of New York ruled that while the XRP token from Ripple Labs was a security when sold to institutional sold to institutional investors, it was not a security when sold to retail investors through digital asset exchanges or when used by service providers.
This will now be contested in court once more throughout upcoming proceedings. Following Ripple's partial victory, a number of industry supporters, including leading attorneys, think the decision will help the Coinbase lawsuit.

Also Read: Landmark Verdict: Ripple's XRP Declared Non-Security by US Judge